U.S. natural gas producer EQT Corp is exploring a sale of a portfolio of minority stakes in wells in Pennsylvania’s Marcellus shale formation, which could be worth more than $3 billion, people familiar with the matter said on Wednesday.
EQT is working with an investment bank to auction the stakes, known in the energy industry as “non-operating” interests, the sources said. Non-operating positions give holders a cut from the hydrocarbons sold without taking charge of drilling or other operations, although they must contribute their share of costs.
The stakes EQT is planning to sell are in assets spread across Northeast Pennsylvania with current production of around 700 million cubic feet per day, the sources said. Chesapeake Energy operates the assets, with EQT holding a 25% non-operating interest and other parties also owning small holdings, they added.
The sources cautioned a sale is not guaranteed and spoke on condition of anonymity to discuss confidential information.
EQT declined to comment.
EQT’s attempt to exit the position, a bulk of which it assumed as part of its $3 billion takeover of Alta Resources in 2021, comes as the company tries to accelerate cutting its $5.9 billion debt pile and boost shareholder returns.
Consolidation in the energy sector has soared in recent months, with U.S. oil majors Exxon Mobil and Chevron announcing takeovers worth over $100 billion combined in just the past two months.
Dealmaking involving natural gas companies has been more subdued, as weak U.S. demand kept commodity prices lower and, in turn, dragged down confidence to pursue acquisitions. But analysts expect a pickup in dealflow next year as rising export demand boosts valuations in the sector.
Chesapeake Energy has approached rival gas producer Southwestern Energy about a potential acquisition, Reuters reported in October, a deal that would displace EQT as the top U.S. natural gas producer.
(Reporting by Shariq Khan in Bengaluru and David French in New York;Editing by Elaine Hardcastle)